Canaccord cuts eEnergy target price after dilutive fundraise, keeps 'buy' stance

(Sharecast News) - Canaccord Genuity has slashed its target price on eEnergy to 0.9p from 9.0p, reflecting the sharp increase in the company's share count following its recent fundraising, while reiterating its 'buy' recommendation on the stock.

The Canadian bank said the AIM-listed energy services group's October placing, which raised £8.3m through the issue of 2.76bn shares at 0.3p each, had materially altered the capital structure and prompted a reassessment of its valuation methodology.

However, Canaccord argued that the fundraising had significantly strengthened eEnergy's balance sheet and addressed a number of legacy issues, including delayed receivables linked to the Mace Solar programme and elevated creditor balances.

The broker now expects the company to end the current year in a net cash position and fully repay £2.5m of short-term debt during 2027.

Canaccord also pointed to strong trading momentum, noting that management expects revenues of at least £25m and adjusted underlying earnings of no less than £2.5m in 2027. It added that those forecasts do not include potential contract wins from two Department for Education tenders worth up to £8m each, leaving scope for future upgrades.

The analysts said recent operational changes under chief executive John Gahan should support lower overheads, improved margins and what it expects to be the company's first year of positive free cash generation in 2027.

Reporting by Iain Gilbert at Sharecast.com